Why is the Innovator’s Dilemma not good enough to protect incumbents?
Leading economist Clayton Christensen recently came out with a book describing a new theory which attempts to help companies having trouble innovating. This was in part an attempt to extend or correct part of his work around disruptive innovation introduced in his seminal work in The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business. His work is targeted at firms unhappy with the progress of their innovation teams. In his September 2016 Harvard Business Review article he states “In a recent McKinsey poll, 84% of global executives reported that innovation was extremely important to their growth strategies, but a staggering 94% were dissatisfied with their organizations’ innovation performance.” No matter how well firms understand the implications around disruptive innovation and how to protect against new entrants, without new profitable products and services all firms will fail. Christensen’s initial theory around disruptive innovation still holds water, however the time is ripe to ensure that larger firms can compete with smaller and more innovative agile firms.
Big Data and Analytics not enough
In Competing Against Luck: The Story of Innovation and Customer Choice, proposes that instead of approaching innovation from a standpoint of customer needs or product value, we should focus on work that needs to be accomplished in the day in the life of a consumer. He points out that most companies simply look at correlations in their customer data and try and assume causation through some heuristic approach and thereby decide what new products or features they want to introduce to the market.
I was fortunate to meet Clayton whilst studying for my MBA at Oxford in 2013. He gave a lecture that for many in the audience was an introduction to Disruptive Innovation. After that introduction to his famous theorem he discussed his thoughts about finding out what value your customer is deriving from your product. Why are they buying from you and not someone else? This is at the core of his work within his “Jobs to be Done” theory. Broadly, he suggests that firms need to understand what jobs people need done in their lives and that we should think about products not as something a customer purchases, but things that the customer will “hire” to do the job they need done.
He used his frequently cited example of his time consulting for McDonald’s in an attempt to sell more milkshakes. Essentially his premise is that McDonald’s past attempts to increase milkshake sales were not effective because they were focusing on the wrong part of their customers motivation. They had been focusing exclusively on the taste of the product. Was it sweet enough? Did they want it to be thicker? Thinner? Did they want other flavors? McDonald’s collected all of this data yet it did not help them sell any more milkshakes.
Author’s Note: Far be it from me to ever question the wisdom dispensed by Clayton, but I still believe that Big Data can still have tremendous value even without understanding causation. If something happens 99 times out of 100, I can make money with that information and I don’t care what caused it because I know on the 101st instance it will almost certainly happen again.
Customers hire products to do a job
While consulting for McDonald’s, Christensen focused on the why the customer hired a milkshake. What job was it doing for them? It turned out that half of all of the milkshakes were purchased before 8AM. In addition, these customers all went through the drive-thru. After interviewing several of the milkshake buyers, Christensen found that the job that they were hiring the milkshake to do was to give their right hand something to do during a long boring drive to work. In addition, it would help them from becoming hungry at around 10AM at work. Note that neither of these two factors had anything to do with the quality or taste of the product.
The Sunday Caper at McDonald’s
Honestly, I don’t frequent McDonald’s that often, but I went through the drive-thru last Sunday after feeling good about burning over 1,000 calories on a ten mile run. I had a craving for a filet of fish and some french fries. Having a family that is either concerned about each others health or simply a family that likes to judge what others are eating, I decided to eat in the parking lot and hide the fact that I was indulging in this most unhealthy activity. It was about 7PM in my little village just outside of Buffalo. The sun had gone down and it was already quite dark given the now fully overcast and dreary sky.
I backed my car into one of the parking spots and turned off the engine but continued listening to some jazz that I usually listen to after a workout. I then proceeded to thoroughly enjoy my meal in the peace and tranquility of my car, in the parking lot, at McDonald’s. Bliss. Then funny thing happened.
I happened to notice there were quite a few cars in the parking lot yet the restaurant was completely empty. Could it be that there were that many employees working? I looked a bit closer and found that most of the cars were filled with people sitting alone in their car just like me. They were eating their meals and occasionally using their other hand to lift a refreshing drink to wash it down. I thought, how ridiculous we must look from someone who would actually take the time to survey the situation. A bunch of grown men and women sitting in their cars on a Sunday evening eating in the parking lot at McDonald’s. So not only did want to be stealth and not want to eat these unhealthy meals in front of our friends or family, we also didn’t want to sit in the restaurant and eat in front of strangers lest they may think we have unhealthy eating habits. Moreover, the lady in the car two spots from me was eating Mighty Taco! I would guess that there were others in the lot eating other fast foods given the many restaurants in the area. The location is perfect since it is right on a circle leading to the main road into town. It allows those going to Wendy’s or Burger King to drive away and act like they are not afraid to share their naughty meals, yet still have the benefit of eating in the privacy of their car.
So here is my free consulting work for the benefit of McDonald’s or any other restaurant that sells unhealthy foods.
People hire your food in part because they want to eat in secrecy and have the sensation of doing something unhealthy in the warm and fuzzy comfort of our cars. Now build a strategy around that. My suggestion?
- No need to make any changes to the product. Change the experience. Make the drive-through even more anonymous. We don’t want to even see the attendant in the drive-thru window because that will likely be the neighbor’s son or daughter who will surely spoil my anonymity by telling their parents who will then tell my spouse. Even if we don’t know them, we still do not want judgement in the form of a stranger who may or may not partake in consuming these unhealthy foods. Make the delivery of food occur through some sort of black box where I open the door and by magic there is my food.
- Make the parking spots darker so we don’t have to see others who are eating in their cars. Even though we are both having the same guilty pleasure, we still are not interested in any type of brotherhood here.
- Get rid of any type of branding on the packaging. That might allow us to take the food to a park or even into our homes without being found out by nosy neighbors.
- Even better than the anonymous branding, allow us to choose our branding. We can decide between the standard McDonald’s branding, but we can also choose one that has branding for a fictitious restaurant called “The Health Nuts” or “Light and Healthy”. Prefer those brands be colored in mostly greens and yellow.
I’m certain the strategy folks at McDonald’s could come up with other ways to take advantage of my insights that I am sharing with them.
Interested in your comments about other interesting jobs that need to be done.
…Article adapted from Logan New Media